Westacott and Dunwoody (No 2)

[2019] FamCA 719

FAMILY COURT OF AUSTRALIA

WESTACOTT & DUNWOODY (NO. 2) [2019] FamCA 719

FAMILY LAW – PROPERTY – FINANCIAL AGREEMENT – Where parties signed Termination Agreement relating to an earlier Financial Agreement – Where husband asserts the Termination Agreement should be declared is binding notwithstanding that it fails to comply with statutory requirements – Where wife notwithstanding her reliance on same in seeking subsequent consent property orders asserts the Termination Agreement is not binding – Where it would be unjust and inequitable if the Termination Agreement was not binding – Orders made that the Termination Agreement is binding.

Family Law Act 1975 (Cth) s 90J

Hoult& Hoult [2013] FamCAFC 109

APPLICANT: Mr Westacott

RESPONDENT: Ms Dunwoody

FILE NUMBER: PAC 1144 of 2019

DATE DELIVERED: 4 October 2019

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 18 July 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Othen

SOLICITOR FOR THE APPLICANT: Dorter Family Lawyers And Mediators

COUNSEL FOR THE RESPONDENT: Mr Lloyd SC

SOLICITOR FOR THE RESPONDENT: Blanchfield Nicholls

Orders

1. That pursuant to s 90J(2B) of the Family Law Act 1975 (Cth) it is declared that the Termination Agreement signed by the parties Mr Westacott and Ms Dunwoody (Westacott) in or about December 2018 is binding on the parties to the agreement.

2. That any application for costs of and incidental to the present application be by way of written submissions filed and served within one month from this date with any submissions in response to be filed and served within 14 days thereafter.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Westacott & Dunwoody has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 1144  of 2019

Mr Westacott

Applicant

And

Ms Dunwoody

Respondent

REASONS FOR JUDGMENT

1. The application for determination arises out of the husband’s Initiating Application filed 13 March 2019.

2. In his Initiating Application the husband variously sought orders as to property settlement, interim spousal maintenance, injunctive relief as against the wife and for the purposes of the present determination a declaration that the Financial Agreement entered into between the parties dated 12 August 2005 was “repudiated by the wife” such that the agreement should be declared non-binding.

3. The threshold issue is in reality whether a Termination Agreement signed by the parties in December 2018, notwithstanding its defects as considered below, should be declared binding; it being unjust and inequitable that it not be so declared. If the Termination Agreement is binding then that resolves the present application. If it is found to be non-binding, then the issue turns to the Financial Agreement of 2005 and whether it should be set aside by reason of the circumstances asserted by the husband and discussed below.

4. The wife filed a Response on 15 April 2019 to the husband’s Initiating Application seeking that his application be dismissed.

5. The wife asserts that the Termination Agreement is not binding as it fails to comply with the statutory provisions giving it efficacy and even if it was binding its operation was contingent upon certain consent orders being made by the Court so the husband is in effect estopped from relying on it. In such a case the issue then devolves to the Financial Agreement of 2005 and whether it should be set aside.

6. These significant issues outstanding between the parties arise by reason of a section 90B Financial Agreement dated 12 August 2005 entered into in contemplation of marriage, a subsequent Termination Agreement relating to that financial agreement and proposed property orders the subject of an Application for Consent Orders filed on 11 December 2018 that was later dismissed for want of any response to requisitions raised by the registrar.

Context

1. On 1 April 2019 the husband filed an Application in a Case seeking injunctive orders in relation to his occupation of the real estate property situate in Town B owned by the wife and that she be restrained from selling, disposing of, mortgaging, encumbering or leasing that property without his consent or order of the Court.  He, otherwise, repeated the orders sought by him in relation to periodic spouse maintenance in the sum of $750 per week.

2. For her part, the wife filed a Response to the husband’s Application in a Case on 15 April 2019, relevantly, seeking that the husband’s interim application for periodic spouse maintenance and injunctive orders be dismissed.

3. The interim issues as to spousal maintenance were heard on 22 May 2019.

4. On 22 May 2019 the parties agreed to interim orders in the following terms:

   (1)Pursuant to s 114(1) the Applicant Husband shall have sole and exclusive occupation of the property  G Street, Town B (“the Town B property”) until 5.00 pm 13 July 2019.

   (2)The Applicant Husband shall vacate the Town B property on or before 5.00 pm 13 July 2019 and shall remove all his belongings and personal effects at that time.

   (3)The Applicant Husband shall maintain the Town B property in a clean and proper state for the period of his occupancy pursuant to this order.

   (4)The Applicant Husband shall be responsible for any damage caused to the Town B property during the period of his occupancy pursuant to this order and shall repair and make good any such damage prior to vacating the Town B property on or before 5.00 pm 13 July 2019.

5. Such orders resolved the questions of jurisdiction as to the injunctive relief sought by the husband and left for determination the issue of periodic spouse maintenance only.

6. On 9 August 2019 an order was made dismissing the husband’s application for spousal maintenance.

7. The husband is presently aged 53 and the wife 51.

8. The parties commenced cohabitation in about February 2004 and subsequently married in 2005.  The parties separated on a final basis in early October 2018 after 14 years of cohabitation.

9. There are no children of the parties’ relationship.

10. Subsequent to separation the husband occupied the wife’s property at Town B until he was required to leave that property by the wife on 9 March 2019. Subsequent thereto he had been accommodated by friends for a period. 

The husband’s documents

1. For the purposes of the present application the husband relied upon his affidavit sworn and filed 12 June 2019 together with the documents exhibited thereto that comprise Exhibit “B” in the proceedings.

The wife’s documents

1. The wife relied upon her affidavit sworn 2 July 2019 and filed 3 July 2019.

Background

1. The parties commenced cohabitation in 2004.

2. The husband acknowledges that in mid-2005 the wife informed him that she would prefer to “operate our financials separately for the duration of our marriage”.  The wife, he says, suggested that they enter into an agreement that provided for each of them to retain their own assets in the event of separation.

3. The husband further acknowledges that the wife had significantly greater assets than he including assets inherited by her from her deceased former partner some years before.

4. In August 2005 the parties entered into a Domestic Relationship Agreement under the provisions of the Property (Relationships) Act 1984 (NSW) and Financial Agreement under s 90B of the Family Law Act 1975 (Cth). That agreement is dated 12 August 2005 (“the Financial Agreement”).

5. There is no issue between the parties that the Financial Agreement is valid for the purposes of the Family Law Act 1975 (Cth) (“the Act”) being an agreement entered into prior to marriage and as such it represents a binding financial agreement.

6. The Financial Agreement detailed the then separate property of each of the parties and inter-alia provided as follows:

   7. Both parties have the right to transfer or otherwise conveyed to the other the whole or any part of any property whether separate property or other property and the transfer or conveyance shall not be a change to this agreement or the intentions of the parties in entering into this agreement or in any other way waive the rights of the parties to insist on compliance with the terms of this agreement if the parties separate.

7. Otherwise, clause 15 of the Financial Agreement provided for an orderly disposition of any jointly owned property following separation.

8. The husband asserts that during the period of the parties’ relationship he made significant contributions to the property of the wife including significant contributions to works undertaken to the building of the parties’ former matrimonial home at Suburb E, extensive renovations to the wife’s property at Town B and various contributions to the wife’s properties at Suburb L, Suburb J, Suburb M and Suburb K. These contributions were in addition to his income throughout the relationship contributed to the parties’ household over their 14 year cohabitation.

9. The wife for her part asserts that the parties kept their respective income separate during their relationship and asserts that any contributions made by the husband to her various properties were modest at best.

10. Yet such issues as to contributions are not relevant in the present context.

11. In September 2018 the parties’ relationship ended.

12. The husband asserts that thereafter the wife contacted him in respect to signing a Termination Agreement setting aside the financial agreement dated 12 August 2005 and subsequent thereto entering into property settlement orders by way of an Application for Consent Orders filed with this Court.

13. The wife for her part asserts that at this time she spoke to the husband informing him that they needed to terminate the “prenuptial agreement” and entered into orders.  She told him that the agreement was old and unfair and it will be replaced by proposed consent orders.

14. The husband asserts a conversation with the wife in September 2018 whereby she required him to vacate her home unit property at Town B and she would pay to him a lump sum of $60,000 to facilitate him obtaining alternative accommodation.  On 22 October 2018 the wife transferred to the husband $20,000 and on 8 November 2018 the wife transferred to the husband $37,900.

15. The wife in October 2018 borrowed $100,000 secured against her Town B property for the purposes of making payments to the husband. She says that in the period from 22 October 2018 to 14 December 2018 she paid monies to the husband totalling $64,290.

The Termination Agreement

1. During this period a Termination Agreement under the provisions of s 90J of the Act was prepared and signed by the parties with the agreement purporting to terminate the Financial Agreement dated 12 August 2005.

2. The Termination Agreement is purportedly dated 12 August 2005 with such date being clearly incorrect and referring to the date of the Financial Agreement dealt with by the Termination Agreement.

3. The Termination Agreement evidences clear intention of both parties that the Financial Agreement be terminated.

4. The Termination Agreement makes no reference to the parties’ proposals as to further or other arrangements for property settlement as between them. 

5. The requirements of s 90J of the Act are as follows:

   Termination of financial agreement

   (1)The parties to a financial agreement may terminate the agreement only by:

   (a)including a provision to that effect in another financial agreement as mentioned in subsection 90B(4), 90C(4) or 90D(4); or

   (b)making a written agreement (a termination agreement ) to that effect.

   (2)Subject to subsection (2A), a termination agreement is binding on the parties if, and only if:

   (a)the agreement is signed by all parties to the agreement; and

   (b)before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and

   (c)either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement); and

   (ca)a copy of the statement referred to in paragraph (c) that was provided to a spouse party is given to the other spouse party or to a legal practitioner for the other spouse party; and

   (d)the agreement has not been set aside by a court.

   (2A)A termination agreement is binding on the parties if:

   (a)the agreement is signed by all parties to the agreement; and

   (b)one or more of paragraphs (2)(b), (c) and (ca) are not satisfied in relation to the agreement; and

   (c)a court is satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding any changes in circumstances from the time the agreement was made); and

   (d)the court makes an order under subsection (2B) declaring that the agreement is binding on the parties to the agreement; and

   (e)the agreement has not been set aside by a court.

   (2B)For the purposes of paragraph (2A)(d), a court may make an order declaring that a termination agreement is binding on the parties to the agreement, upon application (the enforcement application ) by a spouse party seeking to enforce the agreement.

   (2C)To avoid doubt, section 90KA applies in relation to the enforcement application.

   (3)A court may, on an application by a person who was a party to the financial agreement that has been terminated, or by any other interested person, make such order or orders (including an order for the transfer of property) as it considers just and equitable for the purpose of preserving or adjusting the rights of persons who were parties to that financial agreement and any other interested persons.

6. It is common ground between the parties that the Termination Agreement does not comply with the formal requirements of s 90J(1) in that the agreement does not contain statements by legal practitioners complying with the provisions of s 90J(2)(b) and (c).

The Application for Consent Orders

1. On 11 December 2018 the parties lodged with the Court an Application for Consent Orders: Exh “F”.

2. The proposed consent orders (Exh “D”) included a proposed order that “the Termination Agreement is declared binding and enforceable upon the parties in accordance with ss 90J(2A)(d) and (2B) of the Act.

3. The completion and filing of that application again clearly evidences an intention of the parties to be no longer bound by the provisions of the Financial Agreement of 2005.

4. The Application for Consent Orders clearly disclosed the existence of the Termination Agreement and the earlier Financial Agreement of 2005 with those two agreements being attached to that application.

5. In preparation of the Application for Consent Orders the wife obtained independent legal advice with a certificate to that effect dated 10 December 2018 being attached to the application.  The husband did not obtain independent legal advice but acknowledged that he was aware of his right to obtain independent legal advice in the Statement of Truth signed by him dated 2 December 2018 and attached to the application.

The wife’s affidavit

1. Concurrently with the filing of the Application for Consent Orders, the wife filed an Affidavit sworn 2 December 2018 prepared by her solicitors.  The affidavit of the wife attests to the common intention of herself and the husband to have their “property settlement entitlements determined according to fresh Consent Orders not the old BFA”.  The wife further attested to the husband’s unwillingness to obtain his own legal advice in respect to the Termination Agreement as “he was not going to pay legal fees”.

2. The wife further asserted in that affidavit that if the Court were to decline declaring the Termination Agreement binding and enforceable, the result would be manifestly unjust and inequitable upon both parties.  The wife asserted she and the husband would suffer under justness and in equity in having their property settlement determined in accordance with a “13-year-old document against both [her and the husband’s] wishes”.

The Requisitions

1. On 17 December 2018 the registrar wrote to the parties (Exh “D”) declining to make the proposed consent orders as sought by the parties and informing the parties that the proposed draft consent orders “seek a declaration in respect of the Termination Agreement and (sic) this is not an order that the Court can make and need (sic) to be deleted.”  The registrar, otherwise, sought further information such as would enable there to be a determination that the proposed orders were just and equitable and recommended that the husband obtain independent legal advice in respect of the proposed consent orders.

2. The requisitions raised by the registrar were never addressed by the parties. The husband asserted that he did not know what to do and had no intention of doing anything.

3. On 19 January 2019 the wife emailed the husband expressing her concern that even if the registrar’s requisitions were addressed, in the absence of the husband getting independent legal advice the Court could still reject the proposed orders.  The wife proposed that the parties enter into a new agreement.

4. The husband by early February 2019 had sought legal advice relying on the Termination Agreement as to his rights as to property adjustment under the Act.

Section 90J(2A)

1. Section 90J(2A) of the Act provides:

   (2A)A termination agreement is binding on the parties if:

   (a)the agreement is signed by all parties to the agreement; and

   (b)one or more of paragraphs (2)(b), (c) and (ca) are not satisfied in relation to the agreement; and

   (c)a court is satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding any changes in circumstances from the time the agreement was made); and

   (d)the court makes an order under subsection (2B) declaring that the agreement is binding on the parties to the agreement; and

   (e)the agreement has not been set aside by a court.

2. Clearly the termination agreement offends the primary requirements of the section as to the validity, but equally is clearly the defect being the absence of certificates from legal practitioners enlivens the remedial provisions of s 90J(2A).

3. The question thus becomes whether the Court is satisfied that it would be unjust and inequitable if the agreement were not binding.

Unjust and inequitable

1. In Hoult & Hoult [2013] FamCAFC 109 the plurality of the Full Court (Strickland and Ainslie-Wallace JJ) said in considering the similar provisions of s 90G of the Act :

   306…We do not accept that because the enquiry in paragraph (c) is as to injustice and inequity, the content of the bargain must have some relevance. The issue of injustice and inequity can far more easily be seen as directed to whether, given the nature and extent of the non-compliance with the s 90G(1) requirements, it would be unjust and inequitable if the agreement was not binding.

   307.We have referred to the fact that his Honour in paragraph 57 provided a range of factors that it would be appropriate to consider when exercising the discretion. The only factor that we suggest is not available is the last one, but if there is to be a list of factors identified we would prefer the following, all of which are to be found in his Honour’s reasons:

   o The terms of the section, the nature of a financial agreement as a creature of the Act, and the place of Part VIIIA within the overall scheme of the Act.

   o The nature and extent of the non-compliance with the requirements of s 90G(1).

   o   The facts and circumstances surrounding the making of the agreement including, in particular, if one of the parties has complied with all of the mandatory requirements necessary to render the agreement binding.

   o   How the parties have acted subsequently in relation to the agreement (bearing in mind that changes of circumstances cannot be considered).

1. In the present instance the Termination Agreement is simplistic in its intent, that is, to set aside the Financial Agreement of 2005 and allow the parties to agree to other terms of financial settlement. The Termination Agreement contains no reference to any other proposed financial arrangement between the parties by way of orders or a new financial agreement.

2. It is inherent in such a process that the Financial Agreement be set aside prior to there being any power to enter into another binding arrangement by way of consent order or a new financial agreement.

3. The parties signed the Termination Agreement albeit without the legal practitioners’ statements attached even though at that time the wife was legally represented. The wife’s solicitor signed the certificate as to independent legal advice attached to the Application for Consent Orders that inter alia sought to have the Termination Agreement declared binding.

4. The parties sought to have the Court approve the Termination Agreement notwithstanding such defect in the statutory requirements and proposed consent orders as to final property adjustment. The making of such orders were clearly subject to the discretion of the Court.

5. The parties failed to address requisitions raised by the registrar and then the wife proposed that a new Financial Agreement be entered into presumably relying on the Termination Agreement or the fact that a new financial agreement would in itself have to deal with the termination of the 2005 Financial Agreement.   

6. The wife complains that the husband having agreed to the Termination Agreement then resiled from the proposed consent orders such that he should now not be allowed to seek to have the Termination Agreement be declared binding. The difficulty with such argument is that the registrar had by that time already refused, having concerns as to whether they were just and equitable, to make the orders. The parties subsequently did nothing to address that fundamental question.

7. Both parties acted in a way that was inconsistent with the provisions of the 2005 Financial Agreement, in particular, the wife in the payment of various sums to the husband and in a way that was consistent with the effect of the Termination Agreement.

8. In all of the circumstances it would be unjust and inequitable if the Termination Agreement was not binding.

9. There will be a declaration to such effect.

I certify that the preceding sixty-three (63) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 4 October 2019.

Associate:   

Date:  4 October 2019